CHINA: Crackdown to cut baijiu profits by one-fifth - survey
Baijiu makers should brace for a 20% drop in profits, at least, as the Chinese Government's corruption crackdown curbs corporate entertainment budgets, according to a new report.
The white spirit, which accounts for 99% of all spirit sales in China, has been hardest hit by the crackdown, according to the DDMA China Market Snapshot Report, released yesterday (22 July). In a survey of 103 corporate firms, 35% said they were buying less baijiu for entertaining compared to 7% who were cutting wine costs and 1% on international spirits.
DDMA said the figures translate to a “minimum reduction” of 20% in the profits of leading Chinese baijiu companies. According to DDMA, 70% of baijiu makers' profits come from corporate expenditure and gifting.
The survey, which was conducted last month, also found that 40% of Chinese companies said they are reducing corporate entertainment expenditure by buying less alcohol.
The introduction of a clampdown on gifting to civil servants and ban on alcohol at luxury banquets, introduced late last year, has hit the performance of drinks compaines in China, including Pernod Ricard and Diageo.
Business Monitor International's France Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bo...
Eyebrows rose earlier this week at the US$16bn that Suntory is set to pay for Beam Inc. At 20 times the company's EBITDA, the transaction is at the more expensive end of the scale. Here, courtesy of a...
The rate of consolidation in the spirits category is markedly slower than that of many consumer industries. So, could the news this week that Suntory is set to buy Beam Inc trigger a wave of M&A? Past...
- Whatever happened to binge Britain? - comment
- How to turn a domestic spirit into a global brand
- The dangers of squaring up to your competitor
- The US beer market - A level playing field for all
- Remy Cointreau's Q2 and H1 - preview
- Sidney Frank CEO to head Clooney's import co
- Diageo sells off United Spirits' Bouvet Ladubay
- Captain Morgan distillation trial queried by USVI
- Irish whiskey brands could fail without bulk
- Sazerac sues Brown-Forman over Tennessee Fire
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research
- Future growth opportunities for global spirits
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global Wine Market to 2019 - Market Size, Development, and Forecasts